S&P 500 and Nasdaq 100 Decline Despite Positive Trade News and Soft Inflation
The S&P 500 and Nasdaq 100 both saw declines for the fourth day in a row, despite a U.S.-China trade deal and a soft CPI inflation report. The latest inflation figures showed a lower than expected increase, which sparked President Trump’s comments about interest rate cuts. Negotiations for a trade deal with Canada are ongoing, and potential extensions on tariff discussions are being considered.
In a somewhat surprising turn of events, both the S&P 500 (SPX) and the Nasdaq 100 (NDX) experienced declines, marking the fourth consecutive day of losses. This downward trend occurs despite the announcement of a U.S.-China framework trade deal and a surprising soft inflation report, leading some experts to ponder if the market had already priced in this apparently positive news.
The consumer price index (CPI) report for May indicated a modest increase in inflation, rising by 0.1% compared to the previous month, with a year-over-year rise of 2.4%. Economists had anticipated a slightly higher monthly increase of 0.2% but a consistent yearly rate of 2.4%. In terms of core CPI, which excludes food and energy prices for more stable insight, monthly figures also rose by 0.1%, while year-over-year it climbed to 2.8%, both falling short of expectations.
President Trump expressed his enthusiasm on Truth Social, stating: “CPI just out. Great numbers! Fed should lower one full point. Would pay much less interest on debt coming due. So important!!!” Trump’s comments also highlighted the positive relations between the U.S. and China following trade representatives’ agreement on a framework deal. However, it is important to note that this agreement still requires the final approval from both Trump and Chinese President Xi Jinping.
Key points of this agreement include an easing of rare earth export restrictions by China in exchange for increased U.S. exports of aircraft parts and ethane. In addition, there are reports that the U.S. and Canada are making headway on their own trade deal. According to CBC, a working document regarding trade policies has been passed back and forth between the two nations. However, sources indicate that it may take longer before an agreement is signed.
Treasury Secretary Scott Bessent discussed the possibility of extending the July 9 tariff pause deadline during a recent House Ways and Means Committee hearing. While he did not elaborate on the length of any potential extension, the variability could differ based on negotiations with individual countries.
As the trading day wrapped up, the S&P 500 experienced a slight decrease of 0.27% while the Nasdaq 100 saw a decline of 0.37%.
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To summarize, even in light of a U.S.-China trade deal and easing inflation figures, the U.S. stock market took a hit with key indices declining. The CPI report showed inflation rising less than expected, and while Trump lauded this news, the relationship between nations remains complex. The upcoming trade discussions with Canada intensify the trading landscape, with possible extensions on tariffs in the air. All in all, it reveals a rather cautious market sentiment ready to react to these evolving international trade dynamics.
Original Source: www.tipranks.com
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